Politics live blog – Friday 28 May 2010

• Andrew Sparrow with all today's political news, including David Cameron's speech on the economy, and Diane Abbott and Ed Miliband's campaigns for the Labour leadership
•Read Andrew Sparrow's afternoon summary

Updated

Diane Abbott launching her Labour leadership campaign at B6 college in London today. Photograph: Stefan Rousseau/PA

8.43am: David Cameron's economy speech seems to be the main item on the agenda today, but Labour and Lib Dem leadership and deputy leadership candidates are in action too and it may turn out that, when we get the Cameron speech, it won't contain much that was not covered by the extracts released by Downing Street last night.

Diane Abbott, Ed Miliband and Simon Hughes are all doing events this morning. I'll be blogging what they have to say, and the Cameron speech, and any other political news on a day when no single Westminster story is dominating the headlines.

Here's a timetable for the day:

10am: Diane Abbott to launch her campaign for the Labour leadership in east London. My colleague Dave Hill will be there, and he will be sending me updates.

11am: Ed Miliband, another Labour leadership candidate, to launch a national living wage campaign.

11am: Simon Hughes to launch his campaign for the Lib Dem deputy leadership.

1.30pm: David Cameron to deliver what is being billed by Downing Street as his first major speech. Nicholas Watt has already written about it in today's Guardian. "As the government prepares the deepest spending cuts since the 1970s, the prime minister will launch a full on assault on Labour's handling of the economy and insist ministers are united in transforming the economy," he writes.

Many thanks to the new coalition government for helping to make Question Night [sic] even more enjoyable.

Their idiotic decision to try to get me kicked off the panel by refusing to field a minister if I was "the Labour voice" was stupid on so many levels it is hard to know where to start.

First, this is Queen's speech week, and for the government not to be properly represented is a straightforward failure of communications management. It is also an insult to the programme, the audience of Gravesend, and to the much trumpeted Clamberon notion that they are pursuing a new politics of engagement.

Second, it suggested that since becoming the government despite their failure to secure a majority, the Tories have gone all cocky and decided they can start to dictate the terms on which impartial broadcasters go about their business. I may be a bit of a control freak but the idea of saying you can only have x if y is axed was way beyond my understanding of the rules of the game.

Third, it suggests they're a bit frit, and unsure about defending the shifting sands of coalition politics.

9.37am: It's only three weeks since the general election and David Cameron is now embroiled in his first serious battle with a newspaper. It's the Telegraph, which has launched a campaign against the proposed rise in capital gains tax.

But, over a four-page spread on the inside, the paper has made its case with typical thoroughness. "Some argue that opposition to the CGT rise is self-serving carping by well-off people trying to avoid paying tax," it says in its leader. Yes, that's exactly what Vincent Cable thinks. He couldn't have put it better himself. But the Telegraph disagrees. "This is simply not true. Most are people who have paid tax all their lives and who are now seeking to make provision for their retirement, buying assets out of already-taxed income in order not to be a burden on the state in their old age."

Cameron has to resolve this issue by the time of the budget, and it is hard to see how he can satisfy his Lib Dem partners and the Telegraph-John Redwood-David Davis coalition at the same time. No one ever said being prime minister was easy ...

9.57am: David Cameron was on GMTV this morning. As usual, I missed it because I was listening to Today. But, according to PoliticsHome, he had a message for the Telegraph (see 9.37am) and everyone else worried about CGT.

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People need to calm down a bit and wait for the budget.

I presume that means there will be some sort of concession. But the coalition programme – which is in effect the "contract" agreed between the Conservatives and the Liberal Democrats – says "we will seek ways of taxing non-business capital gains at rates similar or close to those applied to income", which does not leave much room for manoeuvre on the central principle.

The government also needs the money to help to fund the increase in the income tax personal allowance, arguably the most important Lib Dem policy in the document.

But most of the GMTV interview seems to have been about the move into Downing Street. According to the Press Association, Cameron said his children were "quite excited" by the move and that they slept "OK" in the new home.

The Camerons are using the No 10 flat while the larger No 11 flat is refurbished. Samantha Cameron apparently wants to improve the kitchen. "What Samantha and I have said is that there is an allowance to pay for work at Downing Street but anything else above that we will pay for ourselves," Cameron said.

10.07am: There's an honours list coming soon. According to Channel 4 News's Cathy Newman, Guy Black will become a peer. A former director of the Press Complaints Commission and a former head of communications for the Conservative party, he's now a director at the Telegraph.

10.32am: My colleague Katie Allen, who writes about economics, says Cameron gave out a slightly confused message on Bank of England independence this morning. She's sent me this:

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Maybe his interview on the GMTV couch was just a case of the PM keeping it simple for a morning TV audience, but he appeared to contradict himself. What are we to make of the two juxtaposed statements: "Policy set independently by the Bank of England – that is the right way to do things" and "we have seen a slightly worrying increase in inflation in recent months so interest rates will be set to control inflation."

Sorry, prime minister, but if the Bank is independent, should you not be suppressing the urge to say how interest rates will be set?

He's unlikely to be really telling the BoE what to do, but maybe he should be more careful with his language.

10.37am: A Downing Street source has been on the phone about the Question Time affair (see 9.07am).

He said the government did not refuse to put up a minister against Alastair Campbell. They merely "questioned" whether it was right to have Campbell on the programme instead of a Labour frontbencher. The BBC then invited John Redwood instead before Downing Street had taken a final decision. "We felt it was legitimate to question why there was no opposition frontbencher in the week of the Queen's speech," the source said.

I'm also told that we are definitely getting an honours list late this afternoon. It will feature the new Tory and Lib Dem working peers, and also the dissolution honours – new Labour peers nominated by Gordon Brown.

10.56am: Paul Waugh, on his blog, says he expects the Next chief executive, Simon Wolfson, to become a peer today. Wolfson was one of the business leaders who backed the Tory campaign against the proposed national insurance increase.

I'm just off to the Downing Street lobby briefing to see if we can find out more.

11.06am: That was easy. No lobby briefing today (see 10.56am). It was cancelled.

11.41am: Simon Hughes has launched his bid for the deputy leadership of the Liberal Democrats, and it seems he has almost won already.

Although the post is deputy leader of the party, and not just the parliamentary party, only MPs get a vote. There are 57 Lib Dem MPs. A candidate needs the support of 29 of them to win, and Hughes says he already has the support of 25.

Hughes also has the backing of Vince Cable, who resigned as deputy leader to concentrate on his duties as business secretary. Cable said today:

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Simon has given the most phenomenal service to the party over his 27 years as an MP. He represents the best traditions of the Liberal Democrats, both as a parliamentary campaigner and community activist. Simon is the person best placed to follow me as Deputy Leader and uphold the values of our party.

As deputy, he could probably make life quite difficult for Nick Clegg (although having a high-profile leftwinger making public statements about what the Lib Dem grassroots will and will not accept could conceivably make it easier for Clegg to extract concessions from David Cameron).

Explaining why he wanted to be deputy leader, Hughes said:

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Our party is at the beginning of an exciting journey in a difficult and challenging time for our country. We are now in government and implementing Liberal Democrat policies for the first time in generations.

The first UK coalition for 65 years will mean great changes and challenges for Liberal Democrat MPs and our party around the country. I believe that I have the strength and breadth of experience to make sure that our party is a strong, supportive but independent voice within and around the coalition.

We must hold fast to our ambition to grow our party and expand the number and diversity of Liberal Democrat elected representatives at all levels of government in the five years ahead.

So far, the only other candidate is Tim Farron, the MP for Westmorland and Lonsdale. Nominations close on Wednesday 2 June and the election takes place on Wednesday 9 June.

11.54am: My colleague Dave Hill was at the launch of Diane Abbott's campaign for the Labour leadership this morning. He'll be filing a full story later, and blogging on the launch as well – but in the meantime he's sent me this summary:

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She launched her campaign in the theatre of the B6 sixth former college in her Hackney constituency, a site of some political importance. Today it is an airy, modern sixth form college with a good reputation for adding educational value, but it stands on the site of the former Brooke House (hence the "B"), where Thomas Cromwell used to live. Abbott told an audience of mainly students said that Alan Sugar – now Baron Sugar of Clapton – had started his first business in the car park that used to be there.

It was suitable setting for Abbott who, as usual, had something of the eccentric schoolteacher about her. "Good morning B6," she said, almost in self-parody. "Good morning Diane," they replied obligingly.

Her campaign themes will resonate with many party members, if not necessarily with the fellow MPs whose nominations she needs if she is to proceed to the main stage of the race (at the moment she has just one).

Liberty's Shami Chakrabarti looked on approvingly as she expressed amazement that Labour in government "lost the civil liberties agenda to the Tories. What were we doing bringing in ID cards in the first place?"

Insisting that the coming debates be about more than leadership – also "the future of our party" – she pledged to reconnect it with ordinary people and asked for greater honesty and accountability informing all policy, from immigration to the future of the economy.

She warned fellow leadership contestants to eschew "cheap anti-immigrant rhetoric", arguing that "people's concerns about immigration are often a proxy for concerns about housing, jobs and wage rates", stressed that "we must remember that one man's public spending cut is another woman's job loss" and that communities like hers, including its young people, would be as badly damaged by a wildly-wielded treasury axe as coalmining areas were by Margaret Thatcher closing the pits.

She closed by urging Labour to admit that it had made mistakes about Iraq, and responded to Alastair Campbell's jibe on last night's Question Time. He'd said that, under her polices, Labour wouldn't have been in power for five minutes. Her riposte was that if the party continued with his kind of policies "Labour will never be in power again". The audience whooped and applauded.

The Labour leadership campaign will be a lot more exciting if Abbott is on the ballot. But sadly that's looking unlikely at the moment. Candidates need 33 official nominations from MPs by Wednesday 9 June. At the moment, as the scorecard on the Labour party website shows, she only has one.

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12.05pm: I've already mentioned the Telegraph's campaign against the proposed capital gains tax increase (see 9.37am). Here are some of the other highlights from the papers:

12.18pm: Simon Hughes says he has the support of 25 Lib Dem MPs. He needs 29 to win. (See 11.41am.)

A spokesman for his rival Tim Farron says Farron so far has the support of between 12 and 15 MPs, including Sir Menzies Campbell, Tessa Munt, Greg Mulholland, Dan Rogerson, Gordon Birtwistle and Ian Swales.

12.58pm: I've just been sent the speech Ed Miliband delivered at the Citizens UK national living wage campaign event this morning. It's not on his website yet, but I presume it will go up soon.

In its manifesto (which Miliband wrote), Labour said it was committed to introducing the living wage (not just the minimum wage, but what someone needs to live on – currently calculated at £7.60 an hour in London, and £7.14 an hour outside London) in Whitehall departments. Miliband is now saying it should be introduced for everyone in the UK.

In his speech, he cited the campaign as an example of what Labour should be doing in opposition:

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Some people will tell you that you can't achieve anything in opposition. Of course we want to get to back to power, but the role of opposition is not just to oppose but also to create.

To create a movement that can change things in opposition and government. To create the conditions in which you can win power. And to create a mandate for things you want to win for

And I say to our party: we cannot win the next election unless we become a genuine popular movement.

Miliband also said Labour could become "the most effective grassroots campaigning organisation in Britain" and that he wanted the living wage campaign "to become the hallmark of a Labour party engaged in local communities, campaigning for change".

2.11pm: David Cameron has just finished speaking. Downing Street released excerpts from his speech about transforming the economy last night and Nicholas Watt wrote a story for the Guardian about Cameron claiming that Britain has been sleepwalking its way to an economy "that is unsustainable, unstable, unfair and, frankly, uninspiring". I've now just read the full text, which should be on the Downing Street website soon. In some ways it's a very conventional speech, full of the sort of claims about wanting to promote economic growth that every prime minister makes. There's even a passage about wanting to drive forward the Doha trade negotiations that could have been delivered by Gordon Brown. But it was not entirely routine.

•Cameron said he was committed to "liberalising". He meant deregulation. "I believe a big part of the previous government's economic failure was their endless interference," he said. But he called it "liberalising" and one section of the speech was headlined "Liberalise". Being in coalition with the Lib Dems seems to be making Cameron change the language he uses.

•Vincent Cable will have the power to say no to new regulation. Cameron reaffirmed his commitment to a "one-in-one-out" rule for regulation, meaning that a minister who wants to bring in a new regulation will have to abolish one too. "No one should underestimate how revolutionary this is ... If the Treasury's power is about saying 'no' to spending, this gives Vince Cable and the Department for Business a new power – in some ways as powerful – to say 'no' to regulation," Cameron said.

•Cameron said he was committed to "radical tax reform". He said that he wanted Britain to have one of the most competitive tax systems in the world.

•He said the government should not be a "bystander" in relation to business. "We will provide modern support for enterprise to grow."

•He said he would be assigning ministers and senior MPs to represent some big cities.

•And he said he wanted the coalition to be remembered for what it did, not for what it was. "I don't want this to be an historic government because we are a coalition, I want us to be an historic government because of what this coalition achieves."

There was also a good fact in the speech. Cameron said the UK exports more to Ireland than to Brazil, Russia, India and China combined.

And one other point was worth noting. At the start of his speech Cameron was introduced by Cable. There have been suggestions that Cable feels uneasy being in office with the Tories and some people think he will be the first Lib Dem minister to resign. But Cable opened with a tribute to the prime minister that sounded warm and genuine. He said Cameron had made a "truly remarkable contribution" to British politics by creating the coalition.

2.32pm: After the speech was over, Cameron was asked a question about capital gains tax (see 9.37am and 9.57am). He said that he wanted to find some "modest additional revenue" from CGT to pay for increasing the income tax allowance. But he suggested people should not assume that meant a simple rise in CGT from 18% to 40%.

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In some ways people have been getting a bit ahead of themselves because they have to wait for the budget, wait for the proper announcement about what will be done to capital gains tax.

Cameron also said that he did not want to penalise those who "put their own money behind a business, start it up [and] work really hard". In saying this, he was merely echoing the coalition agreement, which says there should be "generous exemptions for entrepreneurial business activities". But this will not do a lot to assuage the Daily Telegraph, which seems to be particularly worried about the impact on people who own second homes.

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3.06pm: Here's an afternoon reading list:

•Jim Pickard at the FT's Westminster blog says the election result in Thirsk and Malton is bad for Labour. "The party had hoped that former Lib Dem voters (of the left-leaning variety) would rush to their arms in protest at the coalition. Except that's not what happened in this ballot."

"Laws is an unreconstructed 19th-century Liberal" said [Malcolm] Bruce. "He believes in free trade and small government. Government should do the job only government can do. There's no point in having large public sector if the users of the public services are getting poorer. But he specifically made the point in the house [on Wednesday] that his economic liberalism is tempered by his social liberalism."

What had reconciled me to the [Labour government's] academy policy was, first, the way it channelled new capital expenditure into deprived areas, and, second, that the extra element of diversity and innovation would be good for the system as a whole. The new policy is different in both aspects. The redistribution element has gone; indeed it must be most likely that it will be more privileged schools and sets of parents who take up the new freedoms and funding streams. Second, rather than putting grit in the oyster of the local schools system the policy is now to smash the oyster entirely.

•Downing Street is preparing to release a dissolution honours list. The names have not been released yet, but the London Evening Standard is saying that those getting peerages will include John Prescott, the former deputy prime minister, Sue Nye, a longstanding aide to Gordon Brown, and former Labour cabinet minsters John Reid and Des Browne. The new Tory peers are said to include Guy Black, a former Tory communications chief, Simon Wolfson, the Next chief executive, and Helen Newlove, who has been campaigning against gang culture since her husband Garry was killed.

•David Cameron has urged people to "calm down a bit" over capital gains tax. He also said people were "getting a bit ahead of themselves". His words suggest there will be some concessions when the plans are announced in the budget. (See 9.57am and 2.32pm.)

•Cameron insisted that he was committed to deregulation. Ministers will only be allowed to produce a new regulation if they get rid of an old one. (See 2.11pm.)

•Simon Hughes revealed that he is only four votes away from winning the Lib Dem deputy leadership contest. He needs the support of 29 Lib Dem MPs. He has 25 backers already. (See 11.41am.)

•Ed Balls only needs a nomination from one more Labour MP to be get his name on the ballot for the leadership. (See 1.24pm.)

•Diane Abbott has launched her campaign for the Labour leadership. She said Labour would never be in power again unless it changed its policies. She has only one nomination so far. (See 11.54pm and 3.06pm.)

I'm finishing the blog now. But we'll have a full story on the website when the dissolution honours list comes out. It's due at around 4.30pm.